As we have previously written about here, the CRA has been modernizing its electronic services. As part of these changes, the CRA has updated the GST/HST e-filing returns to require additional lines of detail. Businesses e-filing their GST/HST returns need to understand this new change and complete their GST/HST e-filing returns properly!
As of May 13, 2024, registrants e-filing their GST/HST returns have been encountering the new forms, and the CRA reminded registrants of the change in its Excise GST/HST News – No. 117.
Those who previously filed paper returns will immediately recognize these additional details as lines from the paper returns which have now been migrated over to the e-filing system.
Bill C-69, which received Royal Assent on June 20, 2024, contains various amendments to implement the federal government’s 2024 Budget. In this blog, we discuss a small but important amendment: supplies of certain face masks, respirators and face shields are no longer classified as zero-rated supplies!
Background – Zero-Rated Supplies
Section 165 of the Excise Tax Act (the “ETA”) generally imposes the GST/HST on recipients of taxable supplies made in Canada. Zero-rated supplies are a subset of taxable supplies which are taxed at the rate of 0%. Common examples of zero-rated supplies include basic groceries, prescription medications, and some medical devices.
As a tax lawyer assisting clients in defending themselves against the all-powerful CRA (and its equally powerful ally, the Department of Justice – Canada’s largest and best-equipped law firm), I welcome any judicial decisions that help to right that power imbalance.
Justice Patrick Boyle’s recent decision in Frigorific Warehouse is an exceptional attempt at addressing an inherent problem with Canada’s GST/HST system, which lacks proper mechanisms to deal with tax rogues who gain access to the CRA’s registration system to charge, collect and abscond with GST/HST funds from unsuspecting Canadian businesses. The CRA’s traditional position has been to attempt to recover the lost GST/HST from these unsuspecting businesses (by denying them input tax credits – “ITCs”). Justice Boyle’s decision seems to put that ability into serious question!
In December 2023, the Supreme Court of Canada dismissed the Crown’s application for Leave to Appeal the Federal Court of Appeal (“FCA”) decision in Canada v. Dr. Kevin L. Davis Dentistry Professional Corporation2023 FCA 76(“Davis”), leaving the FCA decision as the state of the law. The FCA had upheld the Tax Court of Canada’s (“TCC”) judgment (2021 TCC 25) allowing Dr. Davis to claim input tax credits (“ITCs”) incurred in the course of suppling orthodontic appliances and services to patients.
